Meltdown: A Free Market Look at Why the Stock Market Crashed, The Economy Tanked, and The Government Bailouts Will Make Things Worse.
It's not often I run across a book which so eloquently and definitively documents what so many of us in the investment/capitalist world seem to know so well. The reality is the last presidential administration and the current one, combined with congress, are both responsible for allowing our country's capitalistic roots and monetary polices to get out of control. In Meltdown Thomas E. Woods does an excellent job explaining monetary policy and why government run programs destroy economies rather than help them.
I was particularly delighted to find another writer finally taking issue with the disaster Ben Bernanke is creating with the federal reserve by printing so much money and monetizing so much debt. Citing Bernanke's 2002 speech "Deflation: Making Sure 'It' Doesn't Happen Here" Woods methodically describes the fallacies associated with this Keynesian type economic theory and why it not only does not work, but if left unchecked can and will ultimately destroy the US Dollar (or any fiat money system). Woods even goes so far as to suggest doing away with the Federal Reserve completely. Even proposing to allow a free market approach to currency as well by allowing commodity backed currencies to enter the market. A very fascinating argument which alone makes the read worthwhile. One of the unique aspects of Meltdown is the central discussion of Austrian School of Economics as a competing theory of economic thought. Woods argues, and I agree, that the Austrian school is the only theory of economics which accounts for economic cycles. Following the Austrian School of economics a Government may minimize the affects of economic recession and even depression by simply allowing the free markets to run their course and work. Woods does an excellent job of documenting several economic recessions in US history where the free markets were allowed to work and the affects of the recessions were so minimal economic historians have hardly mentioned them as a blip in the economic scale.
Anybody who is interested in the financial markets (such as what we teach at TradeSmart University) would do well to read this book. It provides a clear and distinct explanation of the causes and effects of the current crisis. I was most delighted to find at the end of the book Woods laid out a plan for helping the US emerge victorious from this crisis that was almost identical to my own ideas which I recently laid out for a friend. As such I would love to see every member of congress forced to read this book. Alas I have little reason to believe they will take my suggestion, but you certainly may.
My most pleasant delight in this book came from the referral to an excellent website of which I was previously unaware, chocked full of fantastic information related to economics and specifically Austrian School Economics. The Ludwig von Mises Institute is a fantastic resource for anyone who cares to understand more about how free market economies work and how governments can and should act in relationship to true economic freedom. I'm delighted to share this resource with all of our students and blog readers.
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